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tv   The Kudlow Report  CNBC  March 24, 2014 7:00pm-8:01pm EDT

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all right. i like to say there's always a bull market somewhere and i promise to try to find it just for you here on "mad money." i'm jim cramer, and i will see you tomorrow. you tomorrow! u.s. and europe stand together and vote to kick russia out of the g-8. this comes on the same day that the obama administration is approving more natural gas imports. and the missing flight 370 jetliner must have crashed in the indian ocean, no survivor. but the search has intensified over the last few hours. tonight, eric cantor joins
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us as he's making news on capitol hill and we have those stories and much more coming up on "the kudlow report." we begin right now. welcome back. i'm larry kudlow. we're live here at 7:00 p.m. eastern, 4:00 p.m. pacific. the prime minister of malaysia announces what we all have feared, flight 370 went down in the indian ocean. >> good evening, larry. this is devastating news. it was expected but stunning to many. they received the news, many of them via text messages. and we're told that no one on board survived. this place is described as
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literally the end of the earth. over 1500 miles away from perth, australia. apparently flight 370 has been sending an hourly ping to inmarsat satellites even though their system was shut off and that's how officials were able to determine the new location. the malaysia prime minister said to assume that all of the passengers on the plane are gone. this afternoon, the u.s. navy sent tlp-25 to perth, australia, where it will be loaded on a u.s. ship and once there's an approximate place to search, it will be put on the bottom of the ocean floor to try to find the plane's black box. the navy is sending an unmanned
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mini submarine to search the ocean floor in that area. relatives are obviously devastated by the news. time is clearing running out to find the plane. the black box can ping for 40 days maximum and batteries usually last 30 days. with wind and current spreading the wreckage hundreds of miles apart, finding the plane's actual location will be very difficult, especially in the cold, icy seas of the southern indian ocean. larry? >> jennifer johnson, thanks very much. grim news but there you have it. folks, world leaders are getting together for the first time since russia took over the crimea. russia has been kicked out of the g-8. good evening, anne. >> reporter: it's clearly overshadowed by recent developments and also recent steps taken by russia. there's a lot of talk about what russia is going to do and which
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sanctions the west is going to impose on russia, but there is also not one voice yet because their countries, like the united states and uk want harsher sanctions on russia but others vary about the effect of the european economy by those potential sanctions. with that, larry, i'm sending it back over to you. >> anne, thanks. let's get right to it. we have kay bailey hutchinson and momentarily we'll have andy card. senator hutchinson, let me go to you first. >> you have to give credit where credit is due. you have to take that action.
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but larry, it's time for the europeans, along with us, to be very, very serious about sanctions and alternatives to relying on russia about this kind of behavior. >> i want to get back to europe. congressman ken brady, president obama announced today the seventh u.s. application for the export of natural gas, he passed that. me, i want for or 30 more of these. >> it sends a much stronger signal. we know that the faucet does not quite running for a while. russia, i'm not normally the fan of economic sanctions. russia is vulnerable is banking
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and moral natural gas flowing through the u.s. is the right one. >> senator hutchison, i've looked at this, i've looked at numbers, i've looked at everything, the russian's economy is terrible. the stock is down 40%. the ruble is down 20% over the last three years. it's a gas station. outside of that, it's just a gas station. that's all they've got having said that, england and germany and russia raised through the years and germany has something like 6,000 companies operating in russia my question to you is can we, the united states, persuade them to join us in a real financial banking sanctions? >> i think what we have to do is play the natural gas card.
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obviously on the banking side you -- we have to be firm. look at what putin has done. he is just testing the waters to see how much farther he can go. the first thing we have to do is strengthening our nato neighbors outside the ukraine so they have the capability to show strength. but secondly, we need to start right now doing natural gas contracts so we are close to having the surplus -- >> it chantakes a lot to change. >> there are a lot of bills in congress right now trying to open it up. >> we need to vote. we need a vote to do that. it would send one hell of a signals. >> oh, it would be a huge signal. it would take away the lack of leverage that germany has,
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especially 60% of germany is coming out of russia through ukraine. i mean, they are being tepid and we can see why. but if we take steps right now and say we are going to start the export, the building up our liquefication plans so we can start that, that would be one thing. >> it's a big job creator. keystone should have been a layup for him and he didn't do that. i've basically been supporting this that putin is a bad guy. when we come back to the financial sanctions, kevin brady, you've become a monetary expert and financial expert. look, we can't do that alone. you want to have an end to banking with russia the way we ended the iranian relationships.
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but, as i say, in london, they have made a fortune from russian offerings. in germany, they've got businesses. exxon, ford, citi, gm, they are all in russia. without banking sanctions, we don't really hurt them. >> i agree. traditional europe likes us to play the bad guys. that won't work in this case. the banking relationships in london, as you point out, the business relationships cross europe, the investments they've made are numerous, the stock market relationships in london and we're going to find out if europe is serious about containing russia with crimea or they are going to try to finesse some way to -- i agree with you. it won't work without them? >> you've got olagarts sending
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kids to our schools, own fancy apartment buildings, steel mills, we've been through that on this program. i have not heard a peep. literally i have not heard a little bo peep out of british prime minister david cameron. i'm sure president obama is talking to him because his aides know it cannot be done without london. >> he's not being a leader, frankly, in the international areas for -- sometimes i think he has an opportunity to step up and play a leadership role. we'll see if he does. >> we'll see if he does. what do you think? do you ever deal with him? i'm impressed with angela merkel. she is giving putin hell on the phone. >> in russia. she speaks russian. >> that's right. east german.
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so it's cameron that i'm worried about. it's cameron that has the pack of the litter. >> the bottom line that you're both making is the correct one and we saw it in iran with the europeans did not help in the boycott of the products and kept making a nuclear weapon, we know that. so if you don't see that as a lesson, if we don't speak with one voice, we are going to end up with putin going all the way in through ukraine and then we're going to really have the nato -- >> do you think he's going into eastern ukraine? >> absolute he. i think he is testing us just like a 4-year-old kid to see how far he can go before we really get serious. >> if we don't cut his money off, he's got us. seriously. i don't know what the hell -- we're not going to put troops in there. you're right, more muscular nato
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posture. go from the natural gas exports. i would only add, i guess john mccain's idea, let's start renegotiating the defense with -- >> maybe that's the key point. u.s. doesn't have to wait for europe upon everything. we can demonstrate the seriousness with resetting and resorting -- >> if he's got all of these troops on the border, what are we going to do? we're in a hole. >> we could be providing help to ukraine. >> please stay with us. much more talk including the domestic politics, the latest call by election guru nate silver. he made a big prediction for the 2014 elections and it's making some people on capitol hill steaming mad. and later on, house majority leader eric cantor will join us. for now, don't forget free market capitalism is the best path to prosperity in the final
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week of the kudlow row. we'll be right back.
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i looked the man in the eye, i found him to be very
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straightforward and trustworthy. we had a very good dialogue. i was able to get a sense of his soul, a man deeply committed to his country and the best interests of his country. welcome back to "the kudlow report." we have andy card and kay bailey hut hutchison and i'm working off of this excellent "new york times" report today from peter baker. three press denidents and a rid. he seems to be determined to have a russia and euro era.
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>> i think that is he conniving. i was with president bush when president bush did have that conversation with him and i thought president bush did a great job at the meeting. and he actually caused president putin to reflect on things that people didn't reflect him to reflect on, including what was it like to go to your doctor after it had burned down and you found a cross in the ashes? and i remember causing president push to pry into president putin. i understand why he said what he said. having said that, i don't trust him. he's steely-eyed, a little
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inferiority complex. i would recommend to president obama, seek some help from wise people, and bring together the condoleezza rices of the world and henry kissingers and have a serious conversation about what it would be like in russia today if putin were to try to go back to the empire days and how should we address it? i don't think this is an easy problem to try to solve. >> right. >> and clearly we don't want to have to go to world war iii over it. >> i understand. and also in fairness of president bush, in this peter baker story -- and i think peter baker is a very good reporter -- president bush calls him cold-blooded and i think that's colder to the truth. i think president obama has learned that. maybe you have to learn it the hard way. i don't know how it works. i'm not a foreign policy
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specialist. an andy carr, we were talking about financial sanctions which i think is the most immediate way to discipline russia. question for you, do you suppose london and germany, which has so many businesses in russia, do you think they will go along with tough sanctions? >> you know, i don't. i don't think they have the wherewithal to be as tough as they should be. people are not respecting the united states today. they are not admiring the united states today and they do not fear the united states. that's our allies. the neutrals, and our enemies. so i think we've got to do a lot to earn respect. we've got a lot to command admiration and we've got to introduce a little fear. but it would be great for us to be able to get great britain and london in particular to recognize they have to be responsible in this effort, the
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same with germany. i think they can do it but i'm not sure that they can find the complete political will to stand tall because of the -- i'm going to say the tentacles of the economy. >> they are even bigger in london. >> huge. >> and by the way, i can't prove this but i believe, just from what people have been writing and saying, is that they have more money deposited in london banks. now, they've got money in u.s. banks, in the middle eastern banks and everywhere but they've got a lot of assets that could be seized in london. congressman kevin brady, one thought i've had during all of this is that if the united states had a truly strong economy -- in other words, i grew up under reagan. reagan outbid gorbechov.
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he said, i can defend the defense budget and you can't. is it possible that putin takes that into account? >> he has to. clearly our economic strength is not what it was. it sends signals that we're not really ready to back up our words and to play that key role worldwide. our economy, of courts, struggling half the rate it should be in the economic recovery. people still puzzled about how long this is going to take. clearly he can read our economic forecast as well as we can. >> i mean, look, russian economy is terrible, too. they are growing at about 1%. they have 6, 7% inflation, as i said earlier, the last couple, three years, their stock market has fallen 45%. there's evidence that russians are taking their money out of russia. but, but, i don't know if this guy putin, who is such an
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arrogant son of a gun, i don't know that he fears us in economic terms. >> well, i think that's absolutely right. i think we've got to have a credibility and drawing red lines and having them crossed and doing nothing is not the way to instill fear in an adversary. we need to have our allies trust us and our -- adversaries maybe is a better word respect us and know that when we say we're going to do something, we're going to do it. >> putin is our enemy. he was our enemy in syria, iran, and now in crimea and ukraine. andy, question, you've been chief of staff, powerful job. you've held other positions in the government and private sector. it looks to me like president obama is working pretty hard on this. all right? whatever his past miss cues, and there are many, and i have not been a supporter of his
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policies, it looks to me like he sees this seriousness of this and is working very hard, andy. i want to get your take on that, please? >> i think he's been working hard but he hasn't set the stage that is necessary to be strong today. he did not demonstrate strong relationship around the world. he did not demonstrate, i'm going to say, follow through when he issued challenges in syria and other places around the world. so i think he's lost credibility. he's trying to earn it back but i think he needs more wisdom and he does not have a lot of wisdom. >> you want a stron dwger group around him? >> yes. i want people hit by the 2 by 4 dealing with tough diplomatic situations in russia. >> one guy who served in both cabinets, secretary gates. he's the guy. he's been a putin critic from
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day one. maybe that's the guy i should bring back. anyway, we're flat out of time. thank you very much, andrew card, kay bailey hutchison and kevin card, thank you. up next on kudlow, the verdict for the it madoff employee trial.
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welcome back to "the kudlow report." five former madoff employees were convicted of falsifying records. over the six-month trial, prosecutors convinced the jury that the five defendants played key roles in building the ponzi scheme and keeping it going. please stay tuned for more on "the kudlow report." larry kudlow, you are a national asset. thank you for all that you have done for growth, for optimism in this country. we're going to miss your nightly show. thank you for what you have done to mentor people like me to, help us see the light on what it takes to get the country on its feet again. >> it's no secret how economically and politically brilliant you are but many folks may not know how truly kind you
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welcome back to "the kudlow
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report." i'm larry kudlow. we are honored to be joined by house majority leader eric cantor, republican from virginia. mr. leader, welcome back. >> larry, good to be on. thank you, sir. >> let's talk a little business here. what do you see as the republican message in the midterm elections coming up. and as you know, there was a big story in the washington post that suggested this morning that you were moving the party a little bit towards the center. what's the message going to be? >> you know, the message is that right now there's an america under the policies that is not working and that we conservatives, republicans, are for a america that works and the way we get there is through putting forth or conservative solutions as an alternative that the president's policies that have harmed growth and put middle class into a squeeze and
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fwra they have provided a health care that is not working. so we're for an america that works as conservatives trying to pull government back, trying to provide access for private sectors to actually work so he can see a better future. >> you've always been a growth guy, one of the leaders of the growth wing of the party. there's a theme running through all of these news stories that the gop wants to reach out and help the middle class. more take-home pay and more jobs. can you be specific and tell us what kind of policies you're thinking about? >> larry, you and i share a passion for growth. we are about a growing economy and america for all. and if you look at it right now, what's happened is most people in the country are wage earns and most have seen their wages become very stagnant if not
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decline of light. what we're trying to do is promote policies that can help that, that can grow per paychecks. not like the president who insists we need washington telling folks and businesses how much they should pay their employees but, instead, doing some things that take government out of the way of growing wages. the perfect example of that is obamacare's regulation that requires one to have a 30-hour work week, not a 40-hour workweek. if we could just undo that regulation and put back a 40-hour workweek, we would see a 75% increase in a wage earner's check. that's what we're talking about, growing wages. we're against anything that harms job creation and that regulation under obamacare is a -- is depressing wages.
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it also says obama's suggestion of increasing the minimum wage is harm job creation. we don't want to harm job creation. we don't have enough jobs. we also want to grow the economy and wages. we do that by pulling government back, providing a sensible environment of regulation so we can see more growth in businesses, more growth in families and paychecks. that's the kind of future that we envision of conservatives and republicans. >> wouldn't energy really fill that bill? it seems it's so pro growth right now. it's a miracle. it's a revolution. the whole business of lng, liquid gas terminal, there's probably a million jobs there if we did 25 or 30, there's probably 80 to $100,000 a year jobs. it's just like the shale fields up in north dakota. isn't that a tailor-made message
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for you? >> it's not only pro growth from a macroeconomics standpoint, maximizing our indigenous resources, but the families facing the highest home heating bills that they have ever faced. how is it that we're pushing policies that actually expand our energy supplies that, hence, push down home heating costs so that working, middle class families can afford to pay the bills and continue to save for the future and invest with the future. >> when you go into november with unified positions on tax reform and changing obamacare? >> we have a republican in position. we believe that this tax code is to complicated and we can do a lot more from a growth perspective and there's a great way to put together a discussion graph. it's complicated.
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given the rules that we operate under here and to bring many more comments, more discussion so that we can see a better way forward for tax reforms. >> why don't you just give all of the middle class 15%? i get the discussion thing because i worked in washington once upon a time. is there going to be tax reform or is there not? why don't you get rid of the exclusions and give the middle income people a tax cut, like no higher than a 15% rate, maybe 0 to $200,000. now it's helping after tax take home pay. you've got to do that, don't you? >> i agree. i agree with you. we have a president in the white house and senate that doesn't agree. we want to continue to promote those policies or you speak
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about health care. we are, as republicans, committed to a better way in health care, to presenting an alternative path to a better health care that keeps down costs that allows for greater access to providers that also deals with the challenges of those pre-existing conditions. we can do all of that in a better way that doesn't harm people's choice. >> will you have specifics? that's what everybody wants to know. >> we absolutely will have specifics and i will note, larry, there was an alternative that republicans put forward back in 2009 when obamacare passed in the house. we also have several measures that have been proposed by some of our members in the house of representatives. there's one in the senate as well. we are going to get behind an alternative path to a better health care that lowers costs
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and increases patient choice that allows access at a lower cost. this is our aim and, yes, we will put forward our better way of health care. >> last one, sir. a lot of speculation, even today there's a big story up on the breitbart website. number one, is john boehner going to run for speaker, are you going to back him and is he going to win? >> first of all, john boehner has said that he is seeking re-election. i work with him every day to try to effect the kinds of changes and reforms that we conservatives want to see happen on behalf of middle working americans. and it is those people that we ought to bear in mind, they are not waking up in the morning necessarily thinking about which political party, which political individual in washington is doing this or that.
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what they are concerned about is how they are going to make it through the month. how are they going to see a more growing economy that works for them and that's what we republicans are about now and we'll continue to work for in america. >> so the answer is, in a word, you are standing behind speaker boehner? >> yes. all right. that's great. eric cantor, majority leader of the house from the state of virginia, eric, if i may, thank you very much. you've been great to us. now, folks, the margin continues to take a pause in the rally. we're going to talk billion all-stars. please stay with us. gunderman group is a go.
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staying here on the set with me. ron, let me ask you something. we're at the front end of some kind of cyclical, longer run, federal reserve tightening. all right? however long it takes them, however they get it right or get it wrong or contradict or qualitative ease which no one understands, interest rates are going up, right? >> they are not going down. >> right. >> do you think, as a strategy -- this is where i'm going. do you think as a strategy in what is likely to be a rising interest rate environment, that investors should shift to high dividend stocks like utilities or telecoms? >> well, you know, on a rising interest rate environment, larry, i think those stocks will come under pressure as high-paying dividend stocks. wouldn't you think? i don't know why you would do that. i think the strategy you've got to look at is, is interests rates being increased because
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economic performance is improving? i would be wary of any income investments, period, or anything based on income. >> so you would be in a defensive position? a lot of people say, as you go into higher interest rates, you need to be in a defensive position? >> again, if the fed was tightening because economic conditions are improving, i think you can look at a lot of sectors in addition to dividend-paying stocks. that would not be my first choice, larry. >> andy busch, i want you to weigh in on this. do you think the american economy is going to grow faster? do you think the fed is going to raise interest rates sooner? do you think profits -- the mother's milk of stocks -- do you think profits will do well? >> yeah. obviously the economy is going to recover from wintervention that we had or triberia where i
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live. it's going to snow tonight so that's just great. we're going to see a recovery of faster growth than what we saw in the first quarter, no doubt. janet yellen made it clear and steve liesman asks the best question. what's the trajectory of fed interest rates? and it's a very shallow trajectory. we're done with the extraordinary measures. they are not needed. we're not going to take that next step and raise rates aggressively. it's going to be a very slow, gradual way of raising interest rates and tightening things up. the correlation between the five-year yield and stocks generally has been positive and they generally move together and that's where you want to see demand for money pushing interest rates higher. that would be fine. i don't think we'd have any problem with that and because of that you'd also see corporate profits grow at the same time with faster, economic growth.
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>> mike, andy is describing a cyclical play, if i get him correctly, and hence rising interest rates will company rising stocks. do you believe that? >> to some degree. i think that the economy is growing as much as it can given the current restraints and impediments that we have on it. i think it's in a 2% range of growth. that's not bad. stocks can do well. corporate profits can still grow. i don't think you'll make the returns that you've seen in the last five years or so. i don't mind gradually rising interest rates and the quicker the fed gets out of the way, the better. that means the economy is operating on its own in a free market way without subsidies. and so i'm for that and gradually rising rates are indicative of a growing economy. what scares me is driving rates too soon that will cause the fed to react and possibly lose the track that we have. and i'm not so sure that we're
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going to have the great growth. we're talking about the weather and the reason why the economy slowed in the fourth quarter. i hope everybody is right but i'm not quite buying it yet. >> it seems like there's a lot of barriers to growth. >> normally i would cite fiscal head winds but i think right now the fed is becoming the headwind. they haven't moved goal posts. they've removed it. it's the sooner they can get to a normal interest rate, gradually, clearly we're not talking sharp elbows. that's why the missing ingredient is still business investment and far beyond where we need to be. we ought to be 4% growth or more by now. >> you heard everybody weigh in. i'd give you the second whack of the ball. do you buy the cyclical economic growth profits play?
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>> yeah. look, i like the industrial sector. i think that you're going to see -- the question is can we get 3% gdp growth the second half of the year? it's inventory buildup and while it's a good excuse, i think you're going to get that. stocks can go up 8% from here. we do need some changes. talk to your guy next year from washington. we need some tax reform. we need to lower the cost of capital and get entrepreneurs creating jobs. that's what is going to drive this market, larry, not the fed. the fed needs to get out of the way but they won't give you the reason. >> i'm with you. ken brady, though, are we going to get the lower tax rates on capital, get the government out of the way? this is a problem that i have. what do you think? >> if you heard eric cantor, you heard yes. you've been covering this for years. free market capitalism is the
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best path to prosperity. >> it's going to take a while. >> it will. but washington can act. i'd love to have a president willing to go from slow growth policies to fast growth policies. >> andy busch, one of the great p procrastinators, they have a 60% chance of catching the senate. >> yeah. it's interesting. there's a couple of different models running around. i would say there's about 8 -- i'm sorry. 11 senate seats in play. probably 8 of those are really likely to turn over to republicans. if you're just looking at one static, look at the presidential approval rating. it's really low. 41 to 43%. that kind of drives your wave election and that's certainly what we'll get in 2014. >> nate silver, i have to give
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him credit. >> new york sometimes. he just started his 538 blog. i want to make one point on tax reform. that is not a 2014 or 2016 issue. it will come down to who is the republican nominee because that person has to drive this bus. otherwise, it's never going to happen. >> and you're not going to get it until 2017. >> that's right. >> the earliest you could get, we've got to go through two elections, a midterm election, white house presidential election and then maybe the next year, if you all have it planned ready, you can get your tax reform but it's really 2017. this is still early 2014. >> we know it took president reagan some years to get it done. >> yes. yes. >> that's why we laid down the discussion graph and advanced that with specifics. i think it's critical that we start this year. a lot depends on these elections. >> we shall see.
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we're going to wrap up the hour with kevin brady. i want to talk about the yellen contradictions that i think creates contradictions. stay with us. larry, i first remember when i joined cnbc and it's been many moons ago but you put your arm around me and said, tommy, you're doing great. love your work down here. it really helped give me a bit of an ego boost when i needed one down there. ever since then, i have valued our friendship and energy and passion that you bring to what you do. i'm really glad you're still part of the family at cnbc and nbc. congratulations on a great run with your show. >> larry, i love you. you've taught me everything that i need to know to do well in this business. good luck to you. i can't wait to see you again and it's been a great run. this is for you.
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♪ [ male announcer ] bob's heart attack didn't come with a warning. today his doctor has him on a bayer aspirin regimen to help reduce the risk of another one. if you've had a heart attack, be sure to talk to your doctor before you begin an aspirin regimen.
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well, there's some old pictures. welcome back to "the kudlow report." i'm larry kudlow. we're back with kevin brady. let me just ask you, kevin, i don't want to give up on this fed story so easily because i think there's contradictions galore that is going to hurt the economy and maybe the stock market. on the one hand, last week she suggested that they might raise
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the target rate a wee bit sooner and maybe a quarter half a point, six months after they get out of -- she let that cat out of the bag. on the other hand, as john reports today in "the wall street journal," front page story, when you look at the fed notes, they are going to keep short-term rates below normal, even if the economy normalizes, they want short-term rates, too low for too long, in my opinion. how do you see it? >> i agree. even though the market is starting to gradually understand that the stimulus cannot go forever, it has real consequences and i think, too, you made the point and i agree, the fed is not just dealing with interest rates and bond buying, they've got all of the mortgage back securities and they have to somehow unwind all of that over the midterm without fueling inflation. they are supremely confident
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that they can and i am not. >> one thing that troubles me, and on the radio show i had professor john taylor on, which was basically used for 20 years, the so-called great moderation period in the '80s and '90s. we have qualitative easing. no one really knows a basket of job indicators, to me this fosters uncertainly. i prefer rules. >> this is in the eye of the beholder. we always talk about clear communication from the fed and from your years with the fed, you know how important it is to the market. i don't see that happening. >> quickly, in the last few moments. >> really focus on stabilizing the price and dollar, that's the foundation for economic growth. the sooner we get to that, in my view, the faster the economy takes off. >> we've got to leave it there. congressman kevin brady has
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pushed sound money for quite some time. that's it for tonight. our final week continues. we've got more great guests tomorrow, including texas governor rick perry. i'm kudlow. we'll see you tomorrow night. announcer: where can an investor be a name and not a number? scottrade. ron: i'm never alone with scottrade.
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>> narrator: in this episode of "american greed"... in minnesota's twin cities, billionaire tom petters is the face of business success. >> he was a deal chaser and a deal maker. you know, he was a mover and shaker. you couldn't hold tom down. >> $8 million house out in lake minnetonka, i think the one in palm beach was $15 million. >> narrator: a local boy made good, who never forgets where he came from. >> we are a very caring company. that's one of our core values. >> this is a hometown guy who cares about his hometown, who cares about people losing their jobs. >> "this guy is the real deal. nothing to worry about." there seemed to be no reason at all to suspect that something was awry.


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